OT:RR:CTF:FTM H339826 MJD
Ms. Lisa Murrin, LCB Senior Consultant, US Trade Advisory Services Expeditors Tradewin, LLC
795 Jubilee Drive
Peabody, MA 01960
RE: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of Origin of Surgical Towels
Dear Ms. Murrin:
This is in response to your request, dated April 12, 2024, on behalf of your client, Global Resources International (“GRI”), for a final determination concerning the country of origin of surgical towels, pursuant to Title III of the Trade Agreements Act of 1979 (“TAA”), as amended (19 U.S.C. 2511 et seq.), and subpart B of Part 177, U.S. Customs and Border Protection (“CBP”) Regulations (19 CFR 177.21, et seq.). Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division. GRI is a party-at-interest within the meaning of 19 CFR 177.22(d)(1) and 177.23(a) and is therefore entitled to request this final determination.
FACTS:
The subject merchandise consists of blue surgical towels made from 100 percent cotton huckaback weave fabric. The imported towels, measuring either 17 X 24 or 17 X 27 inches, may or may not be sterilized, but are autoclaved. The towels are used during surgery for the absorption of fluids. The cotton fabric used to make the towels is from Bangladesh. In Bangladesh, the fabric is woven and dyed blue. Then the fabric is shipped to Vietnam in rolls, where it is cut to size, sewn, autoclaved, packaged, and shipped to the United States. The surgical towels are classified under subheading 6307.90.89, Harmonized Tariff Schedule of the United States (“HTSUS”).
ISSUE:
What is the country of origin of the surgical towels for purposes of U.S. Government procurement?
LAW AND ANALYSIS:
CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purposes of granting waivers of certain “Buy American” restrictions in U.S. law or practice for products offered for sale to the U.S. Government, pursuant to subpart B of Part 177, 19 CFR 177.21-177.31, which implements Title III of the TAA, as amended (19 U.S.C. 2511-2518).
CBP’s authority to issue advisory rulings and final determinations is set forth in 19 U.S.C. 2515(b)(1), which states:
For the purposes of this subchapter, the Secretary of the Treasury shall provide for the prompt issuance of advisory rulings and final determinations on whether, under section 2518(4)(B) of this title, an article is or would be a product of a foreign country or instrumentality designated pursuant to section 2511(b) of this title.
Emphasis added.
The Secretary of the Treasury’s authority mentioned above, along with other customs revenue functions, are delegated to CBP in the Appendix to 19 CFR Part 0 - Treasury Department Order No. 100-16, 68 Fed. Reg. 28,322 (May 23, 2003).
The rule of origin set forth under 19 U.S.C. 2518(4)(B) states:
An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.
See also 19 CFR 177.22(a).
In rendering advisory rulings and final determinations for purposes of U.S. Government procurement, CBP applies the provisions of subpart B of Part 177 consistent with the Federal Procurement Regulation (“FAR”). See 19 CFR 177.21. In this regard, CBP recognizes that the FAR restricts the U.S. Government’s purchase of products to U.S.-made or designated country end products for acquisitions subject to the TAA. See 48 CFR 25.403(c)(1).
The FAR, 48 CFR 25.003, defines “designated country end product” as:
a WTO GPA [World Trade Organization Government Procurement Agreement] country end product, an FTA [Free Trade Agreement] country end product, a least developed country end product, or a Caribbean Basin country end product.
Section 25.003 defines “Least developed country end product” as an article that:
Is wholly the growth, product, or manufacture of a least developed country; or
In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.
As previously noted, the fabric from Bangladesh is cut to size, sewn, autoclaved, and packaged in Vietnam. Bangladesh is a TAA-designated country, and Vietnam is not.
The information submitted indicates that the surgical towels are made of 100% cotton. GRI also indicates that the goods are classified in subheading 6307.90.89, HTSUS, as a textile product. The rules of origin for textile and apparel products for purposes of the customs laws and the administration of quantitative restrictions are governed by 19 U.S.C. 3592, unless otherwise provided for by statute. These provisions are implemented in the CBP Regulations at 19 CFR 102.21. Section 3592 of title 19 has been described as Congress’s expression of substantial transformation as it relates to textile and apparel products. Therefore, the country of origin of the surgical towels for Government procurement purposes is determined by sequential application of the general rules set forth in paragraphs (c)(1) through (c)(5) of 19 CFR 102.21.
Paragraph (c)(1) states: “The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced.” Since the surgical towels are produced by processing in both Bangladesh and Vietnam, they are not wholly obtained or produced in a single country, territory or insular possession. Therefore paragraph (c)(1) of Section 102.21 is inapplicable.
Paragraph (c)(2) states: “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each of the foreign materials incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement specified for the good in paragraph (e) of this section.”
Paragraph (e)(1) provides that “The following rules will apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section.” The applicable rule, that corresponds to subheading 6307.90.89, HTSUS, states:
6307.90 The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.
In the instant case, the 100% cotton fabric that is woven and dyed blue in Bangladesh is imported into Vietnam where it is cut to size, sewn, and autoclaved to make surgical towels. Therefore, the country of origin of the surgical towels is Bangladesh, where the 100% cotton fabric that comprises the surgical towel was formed by a fabric-making process. As the surgical towels meet the requirements for goods classified in subheading 6307.90, HTSUS, pursuant to 19 CFR 102.21(c)(2), the country of origin of the surgical towels is Bangladesh.
Based on the analysis above, we find that the country of origin of the subject surgical towels is Bangladesh and, therefore, the surgical towels would be the product of a foreign country or instrumentality designated pursuant to 19 U.S.C. 2511(b)(1).
HOLDING:
Based on the facts and analysis set forth above, the country of origin of the instant surgical towels will be Bangladesh.
Notice of this final determination will be given in the Federal Register, as required by 19 CFR 177.29. Any party-at-interest other than the party which requested this final determination may request, pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue a new final determination. Pursuant to 19 CFR 177.30, any party-at-interest may, within 30 days of publication of the Federal Register Notice referenced above, seek judicial review of this final determination before the U.S. Court of International Trade.
Sincerely,
Alice A. Kipel, Executive Director Regulations and Rulings Office of Trade